All posts tagged Alcoa

The marque event tomorrow is Alcoa’s first-quarter earnings report. Unfortunately, the market has to wait until after the bell for this traditional kick start to earnings season (the after-the-bell bit is part of the tradition, too.) The big aluminum company is expected to get things off to a dour start, posting a loss of three cents a share.

Supervalu also reports earnings. The supermarket operator is expected to post earnings of 35 cents a share.

With both these companies, and almost all the others that will report, margins are going to be a big issue.

Alcoa’s quarterly report, due tomorrow after the closing bell, is considered the unofficial beginning to earnings season. Unfortunately, earnings may not be the catalyst investors need to halt the recent pullback in the stock market.

Analysts have been lowering expectations for both first-quarter and full-year earnings. They now expect earnings to show average growth of 0.95% over a year earlier in the first quarter.That would be the lowest rate of year-to-year growth since the end of the financial crisis, and down from expectations of 4.5% in early January, according to S&P Capital IQ. As recently as late September, analysts were looking for 10% growth.

By comparison, S&P 500 earnings rose 8.4% in the fourth quarter and 18% in the third quarter.

Alcoa today announces the rest of its aluminum production cuts, choosing to idle high-cost smelting facilities in Italy and Spain.

With much of global output still operating at a loss at current aluminum prices, and a dramatic price rebound widely viewed as unlikely any time soon, more aluminum makers are likely to follow Alcoa’s lead, says INTL FCStone’s Edward Meir. “Alcoa is a leader on this.”

Alcoa, which is due to report results after the closing bell, was recently off 0.6% at $34.76.

Revenue was higher than expected, at $6.42 billion, compared with estimates of $6.24 billion.

The company blamed “lower metal prices, seasonal factors and weakness in Europe” for earnings that were down from the second quarter.

Remember, analysts have been gouging their estimates for this quarter’s earnings repeatedly, down from 38 cents a share in April to 22 cents just before the report.

“Aluminum prices fell in the third quarter, but most markets continued to grow,” Alcoa CEO Klaus Kleinfeld said in the release. “With the exception of Europe, we saw growth in our end markets, though at a slower rate than in the first half, as confidence in the global recovery faded.”

Mr. Kleinfeld reaffirmed the company’s forecast of 12% growth for this year. He partly blames speculators for the swings in aluminum prices.

Alcoa shares are down 4.5% after hours — but they’re already down 43% since April.

Alcoa’s second-quarter earnings hit estimates, at 32 cents a share. Its revenues were a little better than expected.

Alcoa shares are bouncing around after hours. They were down at first, but are now up about 1%. Update: Now they’re flat again.

The company had beaten estimates for four quarters running. CNBC just said something about how every time Alcoa had beaten estimates in the prior 7 quarters, the S&P had gained about 2.5% in the following 30 days. No word on what happens when they don’t beat expectations but rather meet them instead.

And of course, as is typical in the kabuki theater of earnings season, Alcoa has “met” lowered earnings expectations. According to FactSet, the mean forecast for Alcoa’s quarter was 36 cents as recently as May 31. On June 30, or less than two weeks ago, that forecast was 35 cents.

Ok, so now is the time we all pretend to be hard-core aluminum geeks. The aluminum giant’s report after the close represents the unofficial kickoff for earnings season.

We’re not going to suggest that Alcoa’s report really offers much of a broader read-through on how earnings season is going to go. (Though it does offer some insight on some industries that are large consumers of aluminum such as autos, aerospace, commercial construction.)

The seers on Wall Street expect Alcoa to report 27 cents in earnings per share — excluding those pesky items — on $6.04 billion in sales for the first three months of the year. During the first quarter of 2010, Alcoa reported a 10-cent a share operating profit excluding charges.

For the fourth quarter, Alcoa reported a profit of $258 million or 24 cents a share, compared with a year earlier loss of $277 million, or 28 cents a share. Sales grew 4% to $5.65 billion, largely as a result of higher prices.

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A rout in raw materials has helped drive down holdings in a Carlye Group firm’s flagship fund from about $2 billion to less than $50 million. The collapsing commodities market is spreading pain well beyond specialists to some of the heaviest hitters on Wall Street.